Billion-Dollar Arms Fraud Accuses Americans, South Africans

LEE LINDER

Nov. 01, 1991

PHILADELPHIA (AP) _ The founder of a arms company accused of smuggling weapons that ended up used by Iraq against U.S. troops has reached a deal with prosecutors and is cooperating in the investigation, his attorney said.

James Guerin, 61, formerly of Lancaster and now living in Naples, Fla., was charged in a federal indictment Thursday with masterminding the billion-dollar fraud and heading the scheme to ship equipment in defiance of U.S. laws and United Nations ban.

Some of the equipment was sent by the South Africans to Iraq, which used it against American troops in the Gulf War, U.S. Attorney Michael Baylson said.

Guerin and nine other Americans, plus seven South Africans and three South African companies, were charged in two indictments with fraud and violations of tax, export and money-laundering laws.

At the center of the shady arms dealings was International Signal & Control Corp., or ISC. The Lancaster company was founded by Guerin in 1971.

Guerin's lawyer, Joseph Tate, said Guerin was cooperating in the investigation and had turned over assets, including more than $2 million. He did not reveal details of the plea agreement, and Baylson would not comment.

Tate said neither Guerin, nor anyone at his direction, shipped weapons or technology to Iraq or knew that they would end up in Iraq.

But the government alleges otherwise.

Among those charged with smuggling was Armaments Corp., known as Armscor. The company, owned by the South African government, was accused of reselling American-made technology, including night vision devices, missile components, and grenade technology.

''This case is particularly disturbing because these arms were used against our own troops as they valiantly fought to free the people of Kuwait,'' said FBI director William Sessions in a statement from Washington.

Baylson, whose office is conducting the ongoing three-year grand jury investigation, said ''after the Iraqi war ended our troops dissembled artillery shells and in those shells were found power supplies used against our troops.''

Baylson said the power supplies were shipped by an ISC subsidiary to South Africa, which then shipped them to Iraq.

Past news reports quoting former ISC executives had said the Central Intelligence Agency helped ISC in some of its deals, but Baylson declined to comment. He said the CIA, as well as other government agencies, had been cooperative in the probe.

The other aspect of the case involves a billion dollars in phony contracts added to ISC's books to inflate its worth, the indictment said.

ISC was bought in 1987 by Ferranti PLC, one of Britain's largest defense contractors, for $670 million. Ferranti, which has sued ISC over the alleged fraud, wasn't indicted ''because we consider Ferranti as a victim,'' Baylson said.

The crimes took place from 1979 through 1989, two years after Ferranti bought ISC, Baylson said.

In addition to Guerin, the other American defendants are former ISC executives Robert Ivy, 62, Wayne Radcliffe, 53, Thomas Jasin, 46, all of Lancaster; Robert Shireman, 51, formerly of Marietta, Pa.; Terance Faulds, 51, Holtwood, Pa.; Lawrence Resch, 51, San Clemente, Calif.; Gerald Schuler, 52, West Islip, N.Y.; Anthony Stagg, 53, now of Singapore; and James Russell, 58, now of Johannesburg, South Africa.